Spring Budget 2023: What You Need to Know
The Chancellor, Jeremy Hunt, delivered his Spring 2023 Budget in the House of Commons this afternoon. If you found the announcement too much to digest, we’ve put together all of the key information below.
UK economy to contract by 0.2% this year but avoid recession
The Chancellor says the economy will contract this year but will avoid a technical recession, which is two consecutive quarters of decline.
Economy forecast to grow by 1.8% next year
Despite the above, economic growth is expected in the near future: "After this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027."
Inflation set to fall to 2.9% by end of year
The rate of price rises, or inflation, is forecast to fall to 2.9% by the end of 2023, according to the Office for Budget Responsibility.
Energy Price Guarantee will remain at current level
The Energy Price Guarantee will remain at £2,500 for the typical household for the next three months. The Chancellor says this will save the average family a further £160 on top of support measures already announced.
12 new investment zones
A dozen new Investment Zones are to be created, which will be spread across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland.
Corporation tax to increase to 25%
Corporation tax for businesses is to increase from 19% to 25%, as planned. Companies that make a profit of more than £250,000 will pay 25% tax on their profits from April. The Chancellor pointed out that only 10% of UK companies will pay the full 25% rate.
Small business investment allowance increased to £1m
The Annual Investment Allowance for small businesses is to be increased to £1m, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits.
Tax relief boost for smaller and medium businesses
Small or medium-sized businesses will be able to claim a credit worth £27 for every £100 they spend if 40% or more of their total expenditure is allocated to research and development.
Cash for “levelling up partnerships”
The Government will invest £200m in local regeneration projects across England. A further £161m will be provided for mayoral combined authorities and Greater London, while £400m will be available for new "levelling up partnerships" in areas like Redcar, Cleveland and Blackburn.
Duty on a pint is being frozen
From 1st August, the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets.
Fuel duty to remain frozen
Fuel duty will remain frozen and a 5p reduction will be maintained for a further year.
Cash for leisure centres
A £63m fund will be created to support public leisure centres.
Up to £20bn of support for carbon capture
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£1m prize for AI research
The Chancellor says there will be a prize worth £1m every year, for the next 10 years, "to the person or team that does the most ground-breaking AI research".
Changes to disability benefits
The Chancellor says a white paper is being published today on disability benefits, including plans to abolish the work capability assessment and to separate benefits entitlement from an individual’s ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support.
He also says there will be a new, voluntary employment scheme for disabled people, where the Government will spend up to £4,000 per person to help them find appropriate jobs and put in place the support they need. This scheme will fund 50,000 places every year.
Help for workers suffering with back pain and mental health
£400m in funding is being allocated to increase the availability of mental health and musculoskeletal resources for workers.
Universal Credit sanctions to be “applied more rigorously”
The Chancellor says sanctions will be applied more rigorously to those who fail to meet strict work-search requirements or choose not to take up a reasonable job offer.
For those working low hours, he says the Administrative Earnings Threshold will rise from the equivalent of 15 hours to 18 hours at National Living Wage.
Pensions lifetime allowance to be abolished
The pensions annual tax-free allowance will increase from £40,000 to £60,000 and the Lifetime Allowance (previously set at £1.07m) will be abolished.
Boost for childcare suppliers
There will be a pilot of incentive payments of £600 for childminders joining the profession, and £1,200 if they join through an agency.
Funding to nurseries will increase to £204m from this September, rising to £288m next year, an average of a 30% increase on the two-year-old rate.
The minimum staff-to-child ratio will change from 1:4 to 1:5 for two-year-olds in England, though this will remain optional.
Parents on benefits to get more money for childcare upfront
Parents on Universal Credit will now receive up to £951 for one child and £1,630 for two children per month, which will now be paid upfront.
Free childcare to be extended to cover children from 9 months
30 hours of free weekly childcare is being extended to cover children below the age of three, and will eventually cover all children from the age of nine months. It will only apply to households where both parents are working. The provision only applies within term-time (38 weeks of the year).
Government to fund more wraparound care for school-age children
The Chancellor says the Government will fund schools and local authorities to increase the supply of wraparound care so that all parents of school-age children can drop their children off between 8am and 6pm. The goal is that all schools will start to provide a wraparound offer, either on their own or in partnership with other schools, by September 2026.
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